As with many European countries, Canada will be cutting back on spending in order to rein in the federal deficit.
Finance Minister Jim Flaherty did not provide details but said that the government has to scale back spending in order to eliminate the deficit by 2014.
Opposition parties are concerned that 'turning off the taps' too soon could hurt the economy and especially those most in need.
The Canadian economy is relatively strong (especially compared with other Western economies). This is in part due to the strong demand from developing nations for our natural resources.
We won't know the impact of a reduction in spending until Flaherty reveals the details.
Stay tuned.
Wednesday, December 8, 2010
Friday, August 6, 2010
U.S. Economy Slow to Recover
Canada's unemployment rate inched up in July, although this appears to be due to layoffs in the Education sector due to the summer months.
However, while the Canadian outlook is not too bad overall, the U.S. outlook is far more uncertain. The economy appears to be recovering, but at a slower pace than anticipated.
Unemployment is still high in the U.S. and it is not likely to drop significantly, at least for the short term
However, while the Canadian outlook is not too bad overall, the U.S. outlook is far more uncertain. The economy appears to be recovering, but at a slower pace than anticipated.
Unemployment is still high in the U.S. and it is not likely to drop significantly, at least for the short term
Monday, June 14, 2010
The Negative Impact of Overworked Employees
Overworked employees is nothing new to the corporate world but many executives and company owners are still unaware of the negative impact on a company's bottom that a stressed out employee can have.
In the worst case, the employee can sue the employer, which is never a good thing. Time and money, not to mention the negative impact on reputation, can ruin a small company and cost a larger company.
However, in the vast majority of cases, the overworked employee does not overtly attack his employer. I say overtly because unhappy workers will inevitably find ways to 'get back at' the employer.
This includes using more sick days (either deliberately or simply due to exhaustion), increased accidents at work, sloppy work, errors and infecting the mood of other workers.
This is not necessarily deliberate but in some cases it is. We are currently facing a tough economic outlook and most people are aware that longer hours may be required and that due to layoffs, more work will inevitably fall on their shoulders.
However, taking on new projects, including 'in-house' cost cutting programs, will inevitably lead to resentment and limited success. Assuming these projects even get off the ground, how successful will a 'number 11' priority be when the average employee can't even manage the current 'top 10' priorities?
Given the limited number of employees, maintaining 'business as usual' is tough enough without adding on new projects.
Ever heard of outsourcing some of these projects to the experts...? :)
In the worst case, the employee can sue the employer, which is never a good thing. Time and money, not to mention the negative impact on reputation, can ruin a small company and cost a larger company.
However, in the vast majority of cases, the overworked employee does not overtly attack his employer. I say overtly because unhappy workers will inevitably find ways to 'get back at' the employer.
This includes using more sick days (either deliberately or simply due to exhaustion), increased accidents at work, sloppy work, errors and infecting the mood of other workers.
This is not necessarily deliberate but in some cases it is. We are currently facing a tough economic outlook and most people are aware that longer hours may be required and that due to layoffs, more work will inevitably fall on their shoulders.
However, taking on new projects, including 'in-house' cost cutting programs, will inevitably lead to resentment and limited success. Assuming these projects even get off the ground, how successful will a 'number 11' priority be when the average employee can't even manage the current 'top 10' priorities?
Given the limited number of employees, maintaining 'business as usual' is tough enough without adding on new projects.
Ever heard of outsourcing some of these projects to the experts...? :)
Monday, March 1, 2010
Economic recovery will be slow according to Buffett
Warren Buffett blamed healthcare for dragging down the economy. The U.S. healhcare is bloated and at 17% of GDP, is a much higher cost than healthcare costs of other countries.
Warren supported Obama's planned reforms but said he would prefer 'Plan C', one that focused on cutting costs.
Warren likened healthcare as a 'tapeworm' and said it was 'eating at our economic body'.
While the bloated healthcare in the U.S. is a serious problem, it is almost certainly not the only issue facing the U.S. economy. A massive debt, unemployment, consumer confidence, a housing crisis, not to mention a costly war, could all be added to the list.
Warren supported Obama's planned reforms but said he would prefer 'Plan C', one that focused on cutting costs.
Warren likened healthcare as a 'tapeworm' and said it was 'eating at our economic body'.
While the bloated healthcare in the U.S. is a serious problem, it is almost certainly not the only issue facing the U.S. economy. A massive debt, unemployment, consumer confidence, a housing crisis, not to mention a costly war, could all be added to the list.
Thursday, January 14, 2010
Long-Term Unemployment Increases
Although unemployment figures in the U.S. have remained steady at 10.0 %, long-term unemployment has continued to increase. Long-term unemployment is defined as more than 27 weeks unemployment. 39.8% of unemployed Americans, or 6.1 million Americans have been unemployed for at least 27 weeks as of December 2009. This compares to 22.9% of unemployed Americans, or 3.5 million Americans suffering from long-term unemployment in 2008.
In November 2009, Federal Reserve officials predicted modest economic growth and predicted the jobless rate would drop to between 8.2% and 8.6% in 2011. Still, the Fed cautioned it would take 5 or 6 years for the jobless rate to drop down to pre-2007 levels. Others suggested even longer.
Not all economists agree with these predictions. Some are suggesting unemployment will climb to 10.5% before declining late in 2010.
Either way, 2010 will not be 'business as usual' no matter how much profit Wall Street rakes in. Prudent management of companies, regardless of scale or industry, will do well to keep an eye on expenses as we move into a cautiously optimistic, but uncertain, economic future.
In November 2009, Federal Reserve officials predicted modest economic growth and predicted the jobless rate would drop to between 8.2% and 8.6% in 2011. Still, the Fed cautioned it would take 5 or 6 years for the jobless rate to drop down to pre-2007 levels. Others suggested even longer.
Not all economists agree with these predictions. Some are suggesting unemployment will climb to 10.5% before declining late in 2010.
Either way, 2010 will not be 'business as usual' no matter how much profit Wall Street rakes in. Prudent management of companies, regardless of scale or industry, will do well to keep an eye on expenses as we move into a cautiously optimistic, but uncertain, economic future.
Thursday, December 17, 2009
Disciplined Expense Management Can Drive Earnings
The recent news release from Best Buy (December 15, 2009), of their improved Earnings per Share over last year further confirms the wisdom of not only focused expense management, but also of the advantages of focusing on non-core expenses.
Bob Willett, CEO of Best Buy International, noted that "[their] diligent focus on expense management this year" helped improve overall profitability. It was noted that Selling, General & Administrative (S,G&A) expenses decreased from 22.5% of revenue to 21.3% of revenue. This has a direct impact on the bottom line as well as on cash flow. Even with only a 5% decrease of non-production costs, the impact is both real and noticeable.
While the focus of any company should be on increasing sales, sound expense management practices are always essential. Non-core areas, although smaller than core areas, can nevertheless impact the bottom line. Ignoring non-core areas ultimately leads to inflated expenses and lower profits.
At least Best Buy has it worked out.
Bob Willett, CEO of Best Buy International, noted that "[their] diligent focus on expense management this year" helped improve overall profitability. It was noted that Selling, General & Administrative (S,G&A) expenses decreased from 22.5% of revenue to 21.3% of revenue. This has a direct impact on the bottom line as well as on cash flow. Even with only a 5% decrease of non-production costs, the impact is both real and noticeable.
While the focus of any company should be on increasing sales, sound expense management practices are always essential. Non-core areas, although smaller than core areas, can nevertheless impact the bottom line. Ignoring non-core areas ultimately leads to inflated expenses and lower profits.
At least Best Buy has it worked out.
Thursday, December 3, 2009
Will 2010 be a Better Year?
Yesterday, the United Nations came out with a positive forecast for the global economy for 2010. The primary drive will be from Asia. The U.S. is also expected to see modest economic growth.
Nevertheless, the U.N. cautioned the growth will be 'fragile' and could fail if stimulus spending stops and if the U.S. deficit and external debt continues to climb. Such a crisis could cause global instability.
No word yet on how continued stimulus spending will not lead to a (at least temporary) increase in both the U.S. deficit and external debt.
There is a lot of talk about a looming 'double dip recession' (also mentioned in the U.N. report). There is also a lot of talk about the likehood of 'modest growth' and a 'fragile economy'. I think it's more a case of both cautious optimism and having it both ways. If the economy grows, it was predicted. If it fails, it was mentioned as a realistic possibility.
On that note, I'm not going to be any different. I think 2010 will be better although how much of this is based upon wishful thinking I can't say. Suffice it to say that everyone appears to be in general agreement that we still have a long way to go.
What this means for businesses is simple: stay focused. Don't lose sight of sound cost management practices. Put them in place now (if you haven't already done so).
Nevertheless, the U.N. cautioned the growth will be 'fragile' and could fail if stimulus spending stops and if the U.S. deficit and external debt continues to climb. Such a crisis could cause global instability.
No word yet on how continued stimulus spending will not lead to a (at least temporary) increase in both the U.S. deficit and external debt.
There is a lot of talk about a looming 'double dip recession' (also mentioned in the U.N. report). There is also a lot of talk about the likehood of 'modest growth' and a 'fragile economy'. I think it's more a case of both cautious optimism and having it both ways. If the economy grows, it was predicted. If it fails, it was mentioned as a realistic possibility.
On that note, I'm not going to be any different. I think 2010 will be better although how much of this is based upon wishful thinking I can't say. Suffice it to say that everyone appears to be in general agreement that we still have a long way to go.
What this means for businesses is simple: stay focused. Don't lose sight of sound cost management practices. Put them in place now (if you haven't already done so).
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